The USD is the strongest and the GBP is the weakest as the North American session begins.

<p>The USD is the strongest and the GBP is the weakest as the North American session begins. The UK CPI came in weaker and was a key driver for the pound overnight. BOJs Ueda continues to support YCC measures which softened the JPY as well. </p><p>The UK's Consumer Price Index (CPI) for June 2023 increased by 7.9% year-on-year (y/y), lower than the expected 8.2%, while core CPI rose by 6.9% y/y, below the anticipated 7.1%. This data, which missed market estimates, led to a depreciation of the pound as it lowered expectations for an overly hawkish stance from the Bank of England (BoE).</p><p>After the release of the data, the GBP/USD fell by 0.3% to 1.2965 from around 1.3030. It has since continued the decline reaching a low of 1.2906 in the current hourly bar. Additionally, UK 10-year Treasury yields fell by over 16 basis points to 4.174%. As a result of the softer UK CPI data, the likelihood of a 50 basis point rate hike in August has dropped from around 66% earlier in the week to about 40%, with a 25 basis point rate hike now favored with a probability of 60%. The market is also now pricing in a terminal rate of around 5.83% in February next year, down from roughly 6.04% yesterday.</p><p>The shadow Monetary Policy Committee's recommendation, expected on August 2nd, may also be significant going forward. </p><p>Meanwhile, the JPY is lower after Bank of Japan Governor Kazuo Ueda stated there's still a significant gap to consistently achieve the central bank's 2% inflation target. This comment indicates his intention to maintain the bank's ultra-loose monetary policy. His statement was made in response to inquiries about possible adjustments to the Yield Curve Control (YCC) in the bank's upcoming rate review. Under the YCC, the BOJ sets short-term interest rates at -0.1% and buys vast quantities of government bonds to limit the 10-year bond yield to around 0%. </p><p>US stocks are marginally higher in premarket trading after gains yesterday saw the Dow extend its winning streak to 7 consecutive days and the S&amp;P and Nasdaq to their 6th day up in 7. One of the market's bellweathers, Microsoft, closed at record levels yesterday after the company announced plans to charge a $30 fee for the use of AI in their Microsoft 365 product suite. Microsoft shares are trading at $362.05 after closing yesterday at $359.49</p><p>The indices are also higher ahead of Tesla and Netflix earnings after the close. For Tesla, analysts are focusing on the company's gross margin, which is expected to drop due to a series of price cuts designed to increase sales and combat increasing competition. Despite this, Tesla's shares have seen significant growth over the past three months due to strong delivery numbers and charging agreements with other automakers, such as GM and Ford. Netflix, launched an initiative in May to curb password sharing among users. Observers are interested to see the impact of this on the company's performance. According to Antenna, a streaming analytics company, new sign-ups in the U.S. reached a record high over a four-day period between May 25 and 28. However, subscription cancellations also increased in June. There is also interest in Netflix's response to the ongoing Hollywood writers and actors' strike, although co-CEO Ted Sarandos has stated that Netflix still has a strong lineup of upcoming content. Tester's are trading at $294.84 in premarket trading versus a closing level yesterday of $293.34. Netflix shares are trading at $482 up from $474.80 at the close yesterday</p><p>Crude oil prices are little changed today as concerns about supply strains and uncertainty around U.S. demand, along with China's commitment to rejuvenate its faltering post-pandemic recovery push and pull price action. The EIA will release in their inventory numbers today at 10:30 AM ET. The private data from the API late yesterday showed:</p><ul><li>Crude oil inventory saw a build of 797k. The EIA estimate today is for a draw of -2.440M</li><li>Gasoline inventory saw a draw of 2.8 million barrels. The EIA estimate is for a draw of -1.577M</li><li>Distillates inventory showed a draw of 100k.The estimate today is for build of 0.460M today</li></ul><p>A snapshot of the markets as the NA session gets underway shows:</p><ul><li>Crude oil is trading up $0.17 or 0.22% at $75.81</li><li>Spot gold is trading down -$5.21 or -0.26% at $1973.32</li><li>Silver is trading down -$0.06 or -0.26% at $24.98</li><li>Bitcoin is trading at $30,022 level. At this time yesterday, the price was at $29,918</li></ul><p>In the premarket for US stocks, the major indices are trading modestly lower. Yesterday, the Dow rose for the 7th consecutive day. The S&amp;P and NASDAQ both rose and are up 6 of the last 7 trading days</p><ul><li>Dow Industrial Average is trading up 29 points after yesterday's 366.58 point rise</li><li>S&amp;P index is up 1 point after yesterday's 32.19 point rise</li><li>NASDAQ index is trading up 23 points after yesterday's 108.69 point rise</li></ul><p>In the European equity markets, the major indices are mixed. The UK FTSE 100 is leading the way. The Spanish Ibex, German DAX, and Italy's FTSE are all trading near unchanged</p><ul><li>German DAX, -0.08%</li><li>France's CAC, +0.27%</li><li>UK's FTSE 100, +1.60%</li><li>Spain's Ibex, -0.01%</li><li>Italy's FTSE MIB, -0.02% (delayed).</li></ul><p>In the Asian Pacific market today, markets closed mixed:</p><ul><li><p>Japan’s Nikkei 225, +1.24%</p></li><li><p>China’s Shanghai Composite, +0.03%</p></li><li><p>Hong Kong’s Hang Seng, -0.33%</p></li><li><p>Australia’s S&amp;P/ASX 200, +0.55%</p></li></ul><p>In the US debt market, yields are lower in early US trading</p><ul><li>2-year yield 4.729% -2.3 basis points</li><li>5-year yield 3.969% -3.0 basis points</li><li>10-year yield 3.756% -3.3 basis points</li><li>30-year yield 3.868% -3.2 basis points</li></ul><p>In the European debt market, benchmark 10-year yields are marginally change with the exception of the UK 10 year which is down close to -16 basis points after lower CPI data.</p>

This article was written by Greg Michalowski at www.forexlive.com.